Florida Needs Fairness In Taxation

June 1, 1999

In the Sunshine State, only nave, ignorant and wasteful newcomers pay their full and fair share of local property taxes at first. The savvy, well-informed and frugal can enjoy expensive government services and evade paying a penny in taxes for up to 27 months after they arrive.

That just forces property owners who have lived here longer to subsidize thousands of freeloaders.

A gaping legal loophole permits this injustice to occur. It violates a key principle of any good tax system: Ideally, everyone who benefits from government services ought to pay a fair share of the costs.

A flawed state law -- Florida Statute 192.042(1) -- says that unless a new home, office building, shopping mall or other structure is "substantially complete'' on Jan. 1, it is not subject to property taxation that year.

So any savvy building owners who timed construction to end just after Jan. 1, 1999, won't get a property tax bill on the building until Oct. 1, 2000, and their taxes won't be delinquent until April 1, 2001. They will, however, have to pay 1999 taxes on the value of the land.

If the building were complete by Dec. 31, 1998, the tax bill would be received on Oct. 1, 1999.

It's outrageous that this glitch in the law lets people evade taxes so long.

Various high-growth cities throughout Florida tried an innovative way to get around this inequity by imposing "interim governmental service fees" in lieu of property taxes, starting on the day a building is completed and ready for occupancy. Counties considered similar fees, but delayed action until a court test case like this one was resolved.

Unfortunately, on May 6 the Florida Supreme Court unanimously ruled that a Collier County "services fee" was actually an "unauthorized'' and "impermissible'' tax, not approved by the Legislature. The justices said the fee conflicts with Florida's property tax system and the state Constitution's requirement that "no tax shall be levied except in pursuance of law.''

Although the ruling only directly affects that county, it sets a powerful precedent. It is already prodding officials of other cities and counties to review their service fee ordinances to see how they compare with Collier County's, or abolish the fees outright. The ruling is also expected to inspire class-action lawsuits attacking the fees from people who have been forced to pay those fees, particularly owners of expensive homes and large businesses.

Lack of access to these service fees will cost cities millions of dollars needed to help pay for vital services.

The Supreme Court spelled out the proper solution: "To achieve the relief sought, the counties must persuade the Legislature to provide the cure, not the courts.''

Unfortunately, lawmakers said no to legalizing interim services fees in 1997 when then-Gov. Lawton Chiles asked them to say yes.

Pressure from taxpayers, mayors, city and county commissioners, the Florida League of Cities and Florida Association of Counties should encourage lawmakers to make closure of this tax loophole a high priority for the legislative session starting next February.